Neco 2021 Islamic Religious Studies Question 22

Practice objective / multiple choice question 22 from the 2021 Neco Islamic Religious Studies examination.

Neco 2021 Islamic Religious Studies Objective / Multiple Choice Medium Difficulty
Question 22 NECO • 2021 • ISLAMIC_RELIGIOUS_STUDIES • objective

A seller contracts to sell a piece of land for \(\text{₦}2{,}000{,}000\) payable in two installments: \(\text{₦}1{,}200{,}000\) on signing and the balance after one year. The contract includes a clause that if the buyer fails to pay the second installment on time, a penalty of \(5\%\) of the outstanding amount per month will be added. After a delay of three months, the buyer pays the outstanding amount together with the accrued penalty. (a) Is the penalty clause permissible under Islamic commercial law? (b) What total amount did the buyer actually pay for the land?

Answer Options

A. The penalty clause is not permissible because it creates uncertainty; the buyer ultimately paid \\\\(\\text{₦}2{,}130{,}000\\)
B. The penalty clause is permissible under Islamic law; the buyer ultimately paid \\\\(\\text{₦}2{,}125{,}000\\)
Correct Answer C. The penalty clause is not permissible because it creates riba; the buyer ultimately paid \(\text{₦}2{,}120{,}000\).
D. The penalty clause is permissible as a legitimate compensation; the buyer ultimately paid \\\\(\\text{₦}2{,}115{,}000\\)
Correct Answer
C
Correct Option:
The penalty clause is not permissible because it creates riba; the buyer ultimately paid \(\text{₦}2{,}120{,}000\).

About This Question

This is Neco 2021 Islamic Religious Studies Question 22. It is one of the objective questions from the 2021 Neco Islamic Religious Studies examination.

Difficulty level: Medium .

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